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    • Bank of England January 2020 base rate meeting
    • Lender Dual pricing: what it means to the mortgage seeker
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    • Bank of England cuts the base rate to almost zero
    • Buying, selling and moving home during the pandemic
    • Tightening credit conditions in the mortgage market
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    • The property market reopens for business
    • Lenders reintroduce 90% mortgage deals
    • Turbulent times for lenders
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    • Your guide to mortgage valuations
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    • Introduction
    • 1st Time Buyers Mortgage Guide
    • 1st Time Buyer & Help to Buy
    • What is a Buy to Let Mortgage?
    • Buy to Let Mortgage Advice
    • Flexible Mortgages
    • Interest Only
    • Remortgaging
    • Repayment
  • Protection
    • Introduction
    • Do I need Income Protection Insurance?
    • Income Protection Advice
    • Why do you need Life or Critical Illness Insurance?
    • Critical Illness & Serious Illness Cover
    • ASU / Redundancy
  • Life Insurance
    • Introduction
    • Term Insurance Policies
    • Endowment Policies
    • Family Income Benefit
    • Guaranteed 50 Plus Life Cover
    • Whole of Life
  • Conveyancing & Solicitors
  • Surveys and Valuations
  • General Insurance
    • Introduction
    • Buildings & Contents Insurance
    • Compare & Buy Online Now!
    • Landlord Cover
    • Rent Guarantee
    • Home Buyers' Protection
    • Home Emergency Cover
    • Commercial Insurance
    • Professional Indemnity
    • Public & Employers' Liability Insurance
  • Will Writing & Estate Planning
  • Other Loans & Services
  • Articles
    • Bank of England Rate Rise
    • Fee Free Mortgage Advice
    • Negotiating the best price for your new home
    • Freehold versus Leasehold
    • Why you need advice on mortgages
    • Ten terms first time buyers will want to know
    • Buying process and dealing with estate agents
    • Selling property and marketing options
    • Help to Buy or not Help to Buy: that is the question
    • New home or pre-loved?
    • Interested in interest only?
    • Are lifetime mortgages on the rise?
    • General Data Protection Regulation (GDPR)
    • Solicitors and conveyancers
    • Joint Borrower Sole Proprietor Mortgages
    • The 3% stamp duty
    • First-time buyer stamp duty relief
    • Offset mortgages: how they work and who they work for
    • Self-employed mortgages versus mortgages for those employed by others
    • Mortgages: debts versus deposits
    • House prices increase swiftest in North West compared to rest of UK
    • Transfer of Equity
    • 10 Pitfall Mortgages
    • Remortgages versus product transfers
    • Limited Company Buy-to-Let Mortgages
    • Retirement Interest Only (RIO) mortgages and the new residential option between normal Interest Only and Equity Release
    • 2019 and our rate of interest predictions
    • Brexit and the property market 2019
    • Potential benefits of using a broker
    • The mortgage market: lenders and their existing clients
    • Mortgages and Relationships
    • Robo Advice: is it right for you?
    • Cheaper rates versus cheaper fees
    • Why online mortgage comparisons can be so vastly different
    • Affordability Calculators
    • Cashback Mortgages
    • Government Rent a Room Scheme
    • Government Marriage Allowance
    • The property market continues to move; and the North West is looking good
    • England letting fees banned and how this may affect you
    • Top credit file definitions
    • Understanding your credit rating
    • BTL, LTB, HMO & holiday let terms explained
    • Offset mortgages: term and payment reduction options
    • November 2019 Bank of England base rate
    • The general election candidates for the Chorley Constituency
    • 2019 year-end mortgage lending market
    • 2019 year-end house prices
    • Can we expect sub 1% mortgagee deals?
    • How is Brexit likely to affect 2020 mortgages and house prices?
    • Interest rates in the UK, Europe and beyond
    • How the Great British Pound is faring against Euro and US Dollar
    • Help to Debt (HTD) – the importance of good advice when it comes to making borrowing decisions
    • Bank of England January 2020 base rate meeting
    • Lender Dual pricing: what it means to the mortgage seeker
    • Direct rates offered through lender portals can be costly?
    • Bank of England cuts the base rate to almost zero
    • Buying, selling and moving home during the pandemic
    • Tightening credit conditions in the mortgage market
    • One in seven takes mortgage payment holiday
    • The property market reopens for business
    • Lenders reintroduce 90% mortgage deals
    • Turbulent times for lenders
    • Easing out of lockdown
    • First-time buyer demand surges but options are limited
    • Stamp duty scrapped on homes under 500k
    • Competition watchdog investigates developers over mis-selling claims
    • UK economy may need further stimulus says the Bank of England
    • Your guide to mortgage valuations
    • Your guide to mortgage surveys
    • A quick guide to interest rates
    • A quick guide to inflation
    • The state of the housing market at the end Of 2020
    • What to look for in the 2021 property market
    • Price caps revealed for Help To Buy Scheme
    • Are 95% mortgages coming back?
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  • Are 95% mortgages coming back?

Are 95% mortgages coming back?

The new year brings some good news for first-time buyers who find themselves locked out of the housing market because they cannot pull together a large enough deposit. The government is looking to bring back affordable 95% mortgages to create two million more owner-occupiers.

Boris Johnson announced the move at the virtual Conservative Party conference back in October. "We will help turn Generation Rent into Generation Buy," he said. The prime minister was reiterating a key manifesto pledge from 2019.

High loan-to-value mortgages were widely available at the start of 2020, but due to concerns of a coronavirus recession, many lenders withdrew them from the market. They set a new maximum of 85% LTV which requires a 15% deposit, well beyond many would-be buyers' reach.

How Will The New Scheme Work?

So far, the government has provided few details of the scheme, and it is not yet clear how it would work. At a time of economic uncertainty, financial institutions are unwilling to take on additional risks, but instead of the stringent stress tests they currently apply, the government could assuage their fears by underwriting 95% mortgages with public money. This would safeguard banks against losses if borrowers were unable to keep up with mortgage payments.

A similar scheme was introduced in the wake of the 2008 financial crash after banks and building societies withdrew high loan-to-value mortgages. Prior to that, buyers could access 100% loans.

Buying a home with a low deposit can put buyers at greater risk of negative equity if house prices fall. Faisal Islam, the BBC's Economics Editor, worked out how much this could potentially cost the country. He estimated that if two million people take advantage of the new plan and the average size of a first-time buyer mortgage is £185,300,  the scheme would require tens of billions of pounds worth of guarantees to cover potential losses. However, this would be money held in reserve, not necessarily spent.
 
Nonetheless, the return of 5% deposit mortgage deals is being welcomed by many renters who previously felt unable to realise their dreams of buying a home.

Company address: Euxton Mortgage Market, Hearle House, 5 East Terrace Business Park, Euxton Lane, Chorley, Lancashire, PR7 6TB
T: 01257208946 F: 01257208947 Email: info@euxtonmortgagemarket.co.uk

Euxton Mortgage Market are independent mortgage advisers covering Euxton and the surrounding areas, including: Leyland, Bamber Bridge, Farrington, Lostock Hall, Longton, Adlington, Charnock Richard, Croston and Rivington.

Adrian John Wood, trading as Euxton Mortgage Market, is an appointed representative of HL Partnership Limited, which is authorised and regulated by the Financial Conduct Authority.

*Some of these products are not regulated by the Financial Conduct Authority.

Adrian John Wood is entered on the Financial Services Register (www.fca.org.uk/register) under reference 682490.

H L Partnership Limited is entered on the Financial Services Register (www.fca.org.uk/register) under reference 303397.

The information contained in this website is subject to UK regulatory regime and is therefore intended for consumers based in the UK.

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